“Crummey” Notice Reminder For 2009 Gifts
We want to remind you again that many of you have created a trust or trusts that contain what are commonly known as "Crummey powers." Virtually all irrevocable life insurance trusts contain Crummey powers. Generally, a Crummey power is a right granted to some or all of the beneficiaries of the trust to withdraw from the trust an amount limited by your available gift tax annual exclusion (currently up to $13,000 per donee, or $26,000 in the aggregate for a married couple - amounts that will remain the same in 2010). These withdrawal rights allow gifts to your trust to qualify for this gift tax annual exclusion, but only if the beneficiaries are aware of their rights. Thus, written notice (known as a "Crummey notice") should be given by the trustee to the beneficiaries (or, in the case of a minor beneficiary, to their guardian or parent). If we prepared a trust for you that contains Crummey powers, we would have provided you or your trustee with a form of Crummey notice that could be issued to beneficiaries as needed. We want to remind you again that, in each year that any contributions are made to the trust (and the direct payment of premiums on life insurance owned by the trust constitutes a "contribution"), these notices should be given. The notice should be delivered at the same time as or shortly after a contribution is made to the trust, but in no event later than the end of the year in which the contribution is made, and copies of notices issued should be retained by the trustee in the trust records.
So, if you made contributions in 2009 to or on behalf of any trust that contains Crummey powers and you have not already done so, please send, or remind your trustee to send, the required notice before the end of this year to each of the trust beneficiaries who have Crummey powers.